RSR partner Nikki Baird’s column this week (US Retail, EMV, NFC, and Mobile: Opportunity or Disaster?) talks about U.S. retailers’ apparent lethargy when it comes to next-gen payments. It’s a topic that we both know about, having co-authored RSR’s recent benchmark of the state of next-gen payments in retail. I can’t say it any better than Nikki has, so I’ll quote her: “<It’s> supremely ironic that these retailers seem content to let those very same networks they despise <Visa, MasterCard, et al>, alongside the major banks/card issuers, define how it is retailers should interact with shoppers. Because that is exactly what they’re doing. “

Nikki points out that the U.S. and the rest of the world are out-of-sync when it comes to lowering the risk of electronic payment handling. While in the U.S. retailers were wrapped around the axle of PCI compliance for mag-stripe credit and debit payments, other parts of the world were adopting EMV “chip & pin ” cards. Now, Europeans in particular are clearly unmoved by the possibilities of NFC to replace EMV cards (after all, the conversion of those markets to the next card format didn’t happen that long ago!).

The one thing that these geo-markets have in common however is that they are talking about fairly traditional payment types, i.e. while how a payment will be presented is being argued about, everyone’s still talking about consumer debit and credit. But that’s not all that’s going on, and that brings me to digital vouchers in general, and i-movo in particular.

What’s i-movo? What’s a Digital Voucher?

RSR first talked about i-movo back in 2007. A quick recap: i-movo is a UK-based company that pioneered “mobile vouchers ” as an alternative to paper-based coupons. Since that time, the company has expanded and morphed its offering even as “the world ” continues to argue about mobile’s role in traditional payment handling schemes. Recently, the company has been receiving a lot of industry kudos, for example, the Card & Payments 2013 award as “Best Alternative Payments Program “, the “Future Mobile Award Winner 2012 – Mobile Coupons “, and a Gartner mention as a “vendor to watch ” in the research company’s “Market Trends – Digital Rewards 2012 ” report. So I thought it was timely to give i-movo CEO and founder David Tymm a call to get the latest.

To prep me for the call, David sent a recent company update that described what the company does this way:

“For consumer-facing companies such as publishers, brand-owners, retailers and loyalty scheme operators…Who need to send valuable offers, reward vouchers or make cash-payments to their readers, consumers, customers or members…Digital Vouchers are a new financial services industry payment method that can be distributed using any digital format such as mobile phones, email or payment cards… That can be validated in real-time to limit or prevent over-use, fraud or viral spread and give instant feedback on the success of any campaign or activity…Unlike traditional paper vouchers, digital vouchers are more convenient for consumers, protect the financial risk of the issuer and ensure retailers get paid promptly. i-movo has removed the last remaining technical barrier in the development of this market by developing a method of retail integration that requires no new software or hardware. “

Growth Spurt

Back in 2007, the company had just launched an SMS-based voucher program that helped one of the London dailies to learn who was buying its newspapers while commuting to work. The capability was based on an exclusive arrangement with the UK’s Paypoint network, but that arrangement expired at the end of last year, enabling i-movo to expand its offering. The CEO explained, “what we’ve done now is to add one other payment network called PayZone, and we’ll shortly expand our presence with EPay, and that will give us about 48,000 points of presence in the UK. That creates coverage for about 85% of all newspapers sold (in Great Britain). ” New publishers now using the service include London’s Financial Times.

In March, i-movo announced a mobile app called Paperpay. This is a dedicated voucher-style app for iPhone, iPod touch, iPad and Android for subscriptions to various publications on a weekly, monthly or annual basis- or the user can sign up to a pay-as-you-go mode. Explained the entrepreneur, “it’s a wallet application. The way it works is, you decide what papers you might like to buy – you don’t actually have to buy them, only select ones you might be interested in, and also enter your credit card info. It’s like iTunes; in the course of a week, you only get charged for what you use. The economics of this for the newspapers is that they get the uptick in the subscriptions, but also more ad revenue – which can make up 50% of their total revenues. “

What’s good for the publishers is also applicable to both retailers and product manufacturers. Consumer goods companies are i-movo’s second biggest revenue source. In one example of “extreme marketing “, there’s Magnum, a chocolate candy manufacturer. A “like ” on the brand’s Facebook page enables a consumer to register his or her e-mail address. Then by clicking on various offers highlighted, a voucher is sent directly to the consumer’s mobile device along with a link to a “nearby locations ” map.

Worth Winning

But the biggest growth area of i-movo’s business right now is in cash payments. Said Tymm, “we enable companies to make payments to people who don’t have bank accounts. There are about 7 million households in the UK who either don’t have bank accounts or have limited access to one. We allow companies to fund consumers with cash without going through the payment networks. ” He gave an example: “You might be a consumer who has a pre-paid account with British Gas (an energy company). British Gas provides consumers a smart card which can be topped off to pay the bills. But the UK has a completely deregulated energy market, and consumers tend not to be very loyal – they regularly swap between suppliers. What British Gas does is to say, ‘if you use that money with us for 6 months, we’ll give you a cash bonus.’ That’s free money! The energy company sends the consumer a letter with the barcoded offer, and the consumer goes down to a local shop where the letter is scanned and verified, and the clerk gives the consumer the money out of the till. Retailers like it, because if the bonus is £14, they know that the consumer will spend £9 then and there. “

Last Thoughts

What Mr.Tymm’s last example points to is that while payments may be going digital, there are a lot of people in this world who don’t have bank accounts or credit cards – but their business is worth seeing, understanding, and winning.

Of course, there’s the obvious opportunity of putting value directly into the hands of consumers in a way that will encourage them to use more of that value in a way that creates some loyalty. This is especially true for manufacturer coupons, and i-movo wants to find new ways to address that opportunity as well. “The creative ideas to put value into consumers’ hand are almost limitless, ” said the CEO, “but what they all have in common is the voucher. Manufacturers are excited about that. But retailers are a little indifferent to it. We tend not to promote only one retailer (on an offer), and so instead we promote the payment networks with retailers, particularly conveniences stores. Big supermarkets like Sainbury’s, Tesco, and Morrison negotiate their own deals, but what we do is create a way for manufacturers to reach consumers of smaller retailers based on what they are selling. “

The CEO explained that big retailers “in the head office ” tend not to like such programs, which enable manufacturers to “reach around ” the retailer. But as with i-movo’s cash payments capability, it makes it possible for value to be delivered to people who may be financially constrained, i.e. they may not nicely fit into a big retailer’s picture of who its “best customers ” are. They often don’t have credit cards, and may not even have a bank account. But they will have a mobile phone, and as the CEO pointed out, “their money is just as good. “

And at the end of the day, if there are cash-equivalent offers “out there “, consumers will want to use them. “Going digital ” and especially if it’s mobile-enabled, enables companies to track utilization- how much is being spent, when and where. As with business transactions generally, digital information creates insights that businesses never had before, and ultimately that’s probably the biggest reason why options like the ones i-movo creates should be explored.